Dear Atty. Duran-Schulze,
My mother recently passed away and she was residing in the Philippines at the time of her death. I would like to inquire about the deadline for filing the tax return, and what are the consequences if the estate tax is not paid on time? I hope you can help me in this matter. Thank you for your assistance, Atty.
Dear Writer,
The Estate Tax Return must be filed within six (6) months from the date of the decedent’s passing. In certain cases, the Commissioner of the Bureau of Internal Revenue (BIR) may extend this deadline by up to thirty (30) days.
Additionally, under Tax Reform for Acceleration and Inclusion (TRAIN) Law, whether the decedent is a resident or nonresident in the Philippines, a tax at the rate of six percent (6%) based on the value of such net estate shall be levied, assessed, collected and paid upon the transfer of the net estate.
If the estate tax is not paid, the inherited property cannot be transferred into the heir’s name, nor can it be sold, as a certificate of title will not be issued to confirm the heir’s ownership rights. However, it is possible to pay the estate tax in installments.
The above is applicable even though the decedent is a US citizen. This is because taxes are still assessed if properties are left in the Philippines, if non resident. If a resident, all properties, regardless of the location shall be taxes. This is based on the below (NIRC):
“SEC. 85. Gross Estate. – the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated: Provided, however, that in the case of a nonresident decedent who at the time of his death was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the Philippines shall be included in his taxable estate.”
Further, interests and penalties will be assessed by the BIR if the estate tax has not been paid upon the deadline.
Do you have any further questions that need to be addressed? Talk to our team at Duran & Duran-Schulze Law to know more. You may reach us at (+632) 8478 5826 or +63 917 194 0482 email info@duranschulze.com for more information.
